STUCK IN TIME

Barbara Murray

In 1953, frozen foods epitomized convenience. Now, 50 years later, the category needs to thaw its image as products strive to remain relevant to time-pressed shoppers.

With sales basically flat except for certain pockets, frozens find themselves subject to questions not only about convenience, but compatibility, portability, taste and health, industry sources told SN.

"Convenience has been the discussion," said Jim Veregge, frozen category manager at Unified Western Grocers, Commerce, Calif. "Eight to 10 minutes is no longer a quick meal. The quick meal is now three minutes or less. So what used to be an advantage of frozen over making meals from scratch is not nearly as convenient as some other options, along the lines of refrigerated entrees that you see in the service delis."

Jeff Smith, global managing partner of consultant Accenture, Detroit, agreed that the vast majority of frozen foods out there aren't as convenient as they once were. The increasing variety available from restaurant concepts, and even the supermarkets' own deli and prepared-food departments, has collectively drawn away the demographic that viewed frozen food as convenient, he told SN.

"If food [sold at retail] is not ready to eat, then it's darn close to it," he said. "Frozen will be re-evaluated critically by the progressive merchants, and probably they will decrease their investment and move toward faster-turn, higher-profit items because real estate [in the frozen-food section] is so pricey."

As a category, frozen foods grew only 1.4% in dollar sales, to $27.1 billion, for the 52 weeks ended July 15, according to ACNielsen, Schaumburg, Ill. -- a lesser percentage than the year before, when growth was 4.4%, or in July 2001, when growth was 5.3% over the preceding year.

It's still a lot of dollars, but unit volume fell by 0.6% this year, compared with a decline of 0.8% in 2002. The year before that, unit growth was 0.8%.

Support for frozen foods during these changing times is increasingly becoming a collaborative effort, requiring stronger ties between manufacturer and retailer, and category marketing initiatives coming from the National Frozen & Refrigerated Foods Association, Harrisburg, Pa.

One recent example of these new dynamics in action was found in a visit by retailers to a conference sponsored by Schwan's Consumer Brands North America, Minneapolis, makers of the Freschetta brand of frozen pizza. Some 70 supermarket frozens executives convened for the two-day event that included golf outings and a concert by Sheryl Crow, where patrons sampled Freschetta pizza and watched the brand's team of chefs in cooking demos.

Aside from the perks, the message to retailers is that Schwan strives to create frozen products that rival those found in restaurants. The event also featured serious discussion of the role frozen foods can still play in today's time-pressed lifestyles.

"If the supermarkets are going to compete with the big box, club and dollar [stores], it's not going to be just lip service," said John Stanton, a professor of food marketing at St. Joseph's University, Philadelphia. "If the traditional supermarkets are going to stay in business, they will have to work closer with vendors. This is what Freschetta was saying with this conference."

Stanton said his message at the event was that retailers and manufacturers have to follow consumers. "They are demanding even more convenience," he said, noting that even Campbell's Soup has introduced microwaveable, on-the-go, single-serve cups -- an acknowledgement that the once-simple act of opening a can of soup has become inconvenient. Indeed, the professor recalls hearing about frozen foods' demise as the preferred shortcut for consumers long before today's debate.

"I have been hearing that since the 1950s," said Stanton. "It's been a common discussion, but if you look at some of the innovations, like Skillet Sensations, they're not just food, but an opportunity to add a little bit of your personal touch -- soy, Worcestershire sauce, a splash of wine. Consumers really want to put a meal on the table that they can take credit for."

Although cited by some industry observers, the Meal Starters segment in supermarkets -- excluding Wal-Mart -- was down by 21.9% in dollar sales for the year ended July 15, according to more Nielsen numbers. This followed declines of 31% and 35%, respectively, in the two prior years. Sales are almost $46 million now, so it's no small potatoes, but sales were $130 million in 2000.

"People are looking for quality," said Tom Boothby, vice president of Co-Sales Co., Phoenix. For example, he's seen a lot of interest in family-owned frozen-food operations that have spun off from restaurants, like Michael Angelo's, Austin, Texas, and Kahiki Polynesian entrees, a retail brand extension of a restaurant of the same name in Columbus, Ohio. Kahiki is an upscale product that can be ready in three-and-a-half minutes in the microwave. It retails for $2.49 to $3.29, he said, "cheap, for what it is, unbelievable food."

Other examples play up the time factor. Bakery Chef came out with new frozen French toast sticks that Boothby said take only 25 seconds in the microwave, and are driving a category that has shown a gain of 2.4% in sales, according to ACNielsen.

"I would expect all manufacturers to be looking much harder at the viability of new items, doing more testing and focus groups, and diving deeper into the ROI or payout of new items," said Bob Smith, current chairman of the NFRA and a division vice president for Nestle USA, Solon, Ohio, maker of Stouffer's and other brands.

Innovation and quality are in the industry's favor, but frozens must work to overcome its in-store status as something of a ghetto.

"You market the program, put it on sale, [and] make it exciting for people. Show the product out of the box, finished on a plate," added T.R. Osborn, executive director of the Arizona Frozen and Refrigerated Foods Association, Phoenix. "We rely on showing the products when they're finished. Make sure your photography and promotional materials show it the way it will look on the dinner table."

He praised the point-of-sale materials that the NFRA has made available, called "Freezer Favorites: Bring Us to Your Table."

"In-store signage is what I am talking about. The POS that you see are the products finished, warm and on a table, inviting. Instead of seeing a cold, coffin-style frozen-food aisle, the Bring Us to Your Table theme is a warm and inviting feel, rather than this frozen tundra thing," he said. "We make sure inserts show the way the product looks finished. That is one way to introduce the warmth of frozen food."

BRIGHT SPOTS

The most growth in frozen-food dollar sales occurred in the biscuits, rolls and muffins category (up 13%), frozen pizza dough (up 19%) and several others, according to ACNielsen.

Frozen dinners were up a healthy 8.6%, and entrees -- a separate category -- were led by Asian-style dishes, up 4.4%, to $512 million. Within that segment, one-food Asian entrees were up 2.8%, to $469 million, but those containing two foods -- a smaller segment -- climbed 25%, to sales of $43 million. Mexican and Italian entrees declined.

Frozen seafood and frozen shrimp have climbed for the past three years. Frozen seafood jumped 16% this year, on a gain of 9.5% the year before, which followed an increase of 29.5% in 2001. Frozen shrimp, counted separately, leaped 12% this year, on gains of 37.3% the year before. This followed an increase of 18.1% in 2001. Frozen-seafood sales for the year ended July 15 were $89 million, and frozen shrimp were $739 million.